Mining promises too bold, concedes SA Premier

South Australian Premier Jay Weatherill has conceded the Government needs to be more cautious about spruiking mining opportunities in the state.

Rare earths company Arafura Resources is to scrap a minerals processing plant planned for Whyalla and keep more of its operations close to the mine site north of Alice Springs.

Mr Weatherill said he agreed with the Opposition the Government had a track record of overselling mining projects but underdelivering.

"I think this was a bit over-spruiked. It was always a speculative project but at the time it was always one that was a realistic project," he said.

"We did no more or less than back up what the company was saying about what they proposed to do, but I think we should be a little more cautious about that and obviously cases like this indicate that."

Mr Weatherill said with both the shelved BHP Billiton Olympic Dam mine expansion and now Arafura's project, the Government only backed up what the companies had told it.

"We did the thing we could do which was to provide speedy approvals, now to the extent to which we jump up and down and say this is going to happen is something we can control and we have to take a bit of care about that," he said.

"It's difficult to underestimate the significance of these projects, because they are significant."

Dave Sweeney from the Australian Conservation Foundation said the loss of hundreds of potential jobs was a disappointment for Whyalla, but the decision against shipping material south for processing was a win for the environment.

"There are real concerns with this sort of processing and rare earth processing - you're dealing with radioactive materials including uranium," he said.

"You would have radioactive exposures and elevated radiation levels in the area, you'd be left with a waste stream that would include a range of radioactive materials that pose a long-term human and environmental problem."